Investors are preparing to write off nearly the entire value of their stakes in Swedish battery giant Northvolt as a crisis at the troubled European green technology champion deepens.

Once valued at more than $12bn (£9bn), Northvolt is scrambling to raise hundreds of millions of euros to shore up its finances after a global downturn in demand for electric cars. 

Northvolt had been building one of Europe’s biggest battery plants, close to the Arctic circle, which would have produced home-grown cells for the continent’s carmakers.

However, one of Northvolt’s biggest shareholders has already marked down its stake in the business by as much as 85pc amid the cash crunch.

The London-listed Scottish Mortgage Investment Trust, one of Northvolt’s biggest shareholders, has scratched hundreds of millions of pounds from the value of its holdings, according to filings published this month. 

The fund, which is managed by Baillie Gifford, values its shares in the business at just £57m, compared to £380m in 2022, when investors valued Northvolt at $12bn. The write-down suggests investors expect Northvolt’s value to plunge by more than $10bn. 

Investors often revalue their stakes in privately held companies based on their “fair value” – or what they believe would be paid for them.

The Swedish business is racing to find fresh cash to survive. On Friday, Reuters reported that Northvolt was in the process of raising around $200m in short-term funding from customers and lenders.

Northvolt, founded by former Tesla executive Peter Carlsson, has raised billions of euros in debt and equity to build more environmentally friendly EV batteries, which it says have 90pc lower carbon emissions than those of rivals.